The Good News Might Be the Bad News

The 2019 Annual Impact Investor Survey from the Global Impact Investing Network (GIIN) does away with pleasantries. The tone for the survey is set by Sapna Shah, the GIIN’s managing director, as she states that she finds herself, “impatient at the thought of dwelling [about the future] when we have so much work left to do.” We all know of the inevitability of climate change and unequal access to basic needs that seems to grow daily. This survey provides a status update on the growth in numbers, nature of practices of, and commitment to achieving the combination of financial and positive impact goals on the part of the 266 impact investor organizations that make up the GIIN. 

The first finding of the survey is that, simply put, “the impact investing industry continues to grow and mature.” According to the GIIN, a group of 80 respondent organizations, “grew their impact investing assets from USD 37 billion four years ago to nearly USD 69 billion this year,” with a compound annual growth rate of about 17%. The future is also promising. During 2019, the respondents of this survey, “plan to invest over USD 37 billion into more than 15,000 investments.” These future investments reflect a 13% growth in volume of capital invested and a 14% growth in total investments. Furthermore, as the industry grows, it becomes more diverse. The 266 respondents differ in organization type, headquarter locations, investment focus, target returns, asset allocations, and impact objectives.

The respondents report in line performance with both financial and impact goals, of which impact measurement and management are essential. Over 90% of the organizations that responded to the survey, “reported performance in line with or exceeding both their impact and their financial expectations.” Even 15% outperformed their expectations. Upon deeper reflection, this statistic is alarming. It suggests that there is little room for these organizations to improve since they are hitting all of their targets and impact goals. However, because the GIIN’s managing director explicitly states that there is, “much work left to do,” one begins to wonder if these organizations have set rather unimpressive goals to better their own image as environmentally/socially conscious, without actually holding themselves accountable to improving the health of the planet in absolute terms or improving the well-being of their stakeholders (other than their investors).

Impact measurement and management is at the core of these goals and expectations. Nearly all (98%) of the impact investors actually measure and manage their impact. The respondents of this survey, “make impact investments because they are part of their commitment as responsible investors (85%) and because intentionally pursuing impact is central to their mission (84%).” Many of these organizations do so because their staff is motivated to align their careers and personal goals by working for a mission-driven, impact conscious organization. 

This survey demonstrates impact investors commitment to developing the industry. The GIIN has an, “unabashed vision for a world where finance is a force for good,” and investors play a key role in changing how finance is thought of and how to create a new normal where impact is considered in all investments. The respondents played their part by, “sharing [their] best practices for impact measurement and management (61%), supporting the development of businesses focused on impact (52%), and training finance professionals (43%),” on impact methods. How the market looks depends on the actions of these investors. While they have done much to prepare for a rather uncertain, unnerving future, investors indicate that more effort needs to be put into educating and training finance professionals about impact investing, more businesses need an impact-oriented focus, and more energy needs to go into developing better impact reporting tools and strategies. In other words, “we have so much work left to do.”